As we mentioned early on Friday in our post before the NFP data, the Euro and Pound were holding critical support areas. After a release of data that fell way below expectations on payrolls it seems it’s time to punish the US Dollar once again.

The downtrend which has been in place over the last year could well come into play once again, with the DX testing the congestion area from August 2009 over the last week it is now looking in danger of falling back from it. Any Dollar negative data this week, accompanied by a bout of stronger Euro and Pound data could well see the DX slip back to test the 50% fib of the December rise (so levels of 11th December would be circa 1.6280 GBPUSD and 1.4700 Euro)

GBPUSD left a gap from Fridays close price. It is very common to see these gaps closed, as price tends to test areas like this for volume before moving on, but sometimes price can also breakaway if the overall trend is too strong, and come back at a much later date to re test it. Until we see a move and hold above some intraday supports we would be wary of moves back to Fridays close level and play any trades cautiously.

As always let the trend be your friend, find your support or resistance to trade from / place stops at and go with it if it stays strong. Make sure any trade and subsequent stop level meets your risk profile before entering, not making this evaluation is the worst mistake made by many who are forex trading.

Regards and happy trading.

FR Admin.